Questions tagged [currency]

a generally accepted form of money, including coins and paper notes , which is issued by a government and circulated within an economy.

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23 views

What are the issues with currencies backed by commodities?

I have seen it suggested that currencies that are backed by a commodity are generally considered to be a bad idea in most cases. However, I have done a bit of my own research into representative money ...
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If a currency is pegged to another currency which collapses, what happens? [closed]

If a currency X is pegged to another currency Y which collapses, what happens to currency X?
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1answer
76 views

Should we get rid of the Penny?

Jeff Gore has suggested scrapping the 1 cent coins a few years ago. Why doesn't the US cancel the pennies? Is it that terrible to the economics to keep the copper coin? As mentioned in the comments, ...
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325 views

Buying locally vs abroad

I interested in the net effect of buying locally versus abroad. The UK Government wants to buy a ship. It can buy from a UK or Korean shipyard. The unit price is the same for both yards: £10. A ten ...
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74 views

Why hyper-inflation?

I understand the $MV=PQ$ identity. I also understand the benefit for the government in some cases to having non increasing over time (even if high) values of $\Delta P$ (stealth tax & seigneur-age ...
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162 views

How large is the Underground Economy in the U.S

How large is the Underground Economy in the US, and is it growing or getting smaller as a percent of GDP?
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Can we get rid of banknotes and coins?

this is more a theoretical question, nowadays with Internet, Debit/Credit cards and Cryptocurrencies, why should we keep printing/making more physical money? granted not everybody has access to ...
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1answer
229 views

Is it true that the U.S has to run a chronic trade deficit with the rest of the world as a price to pay for being the world's reserve currency?

I have heard of the argument that in order for USD to be reserve currecy, the rest of the world must own enough USD to store it as reserves. In order for the rest of the world to own enough USD, U.S ...
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1answer
59 views

Devaluation of Venezuelan Bolívar - Will it increase or fight hyperinflation?

According to recent news, Venezuela is lopping 5 zeros out of its regular Bolívar, and devaluing it, and pegging it to a cryptocurrence issued by Venezuela, to fight the economic situation (...
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Does accumulation of fiat currency cause instability?

If the value of fiat currency is a function of the supply of money and it's velocity, is the accumulation of that currency detrimental to its stability? I may be wrong in my understanding of the ...
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125 views

Does only “supply/demand” rule justify different prices for a digital good?

Provided the network infrastructure costs the same for the seller (if things going on with net neutrality weren't to effect that), certainly considering the fact that an average citizen of a given "...
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69 views

What are the advantages and disadvantages to a country's people when the national currency is the world's reserve currency? [duplicate]

Today, the world's reserve currency is USD. At the start of the 20th century, the reserve currency was the British Pound GBP. Using U.S as an example to narrow the scope, what are the advantages and ...
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1answer
156 views

Why do different countries have different currency ? Why not there are different currencies for each 10-20 kilometers?

I have researched a bit in different forums. Main answers include: 1. So Different countries can control different monetary policies 2. So different countries can handle shocks(up and down). 3.Based ...
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When/Why would a country want to create its own currency?

A while ago I asked how countries make a currency and give it value, specifically pointing out that I wasn't concerned about when/why such a thing would be done. Well, now I'm asking the exact ...
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159 views

Why don't we transact with securities rather than fiat money?

I don't know a whole lot about economics besides for an intro course I took once so bear with me please... I'm a software developer working with cryptocurrencies, and I got to thinking that it would ...
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37 views

Does the currency in circulation equal the annual production of goods and services?

I have learned that in a country currency is printed equal to production of goods and services in a year. I want to know if in a year a country produces rice of 10000 rs. The government will print ...
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1answer
360 views

What would happen if a country bans the trading of its currency against foreign currency?

The iranian rial has been losing its value rapidly recently. The dollar went from 40,000 rials to 60,000 rials in less than 6 month, most of the loss of value happening in the last few weeks. Iran ...
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65 views

Why would a common currency such as the Euro that can't be devalued be incentive for banks to lend money to a country?

I'm reading an article that is claiming that when the Euro was created, banks began lending more money to countries than before because as the Euro is a common currency across many countries one ...
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Can a currency crisis be the proximate cause of a debt crisis?

I'm just curious whether there are any historical examples of a currency crisis in a country (speculative attacks leading causing a sudden devaluation of currency) leading directly to a debt crisis?
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1answer
123 views

The link between US debt of $250 Trillion dollars and “Promise to pay” on US Dollar currency

Giving background to my question: a prominent economist was discussing the problems of the US currency and predicting it's collapse, said the following: "...a currency is a store of value, it's a ...
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Is there merit to the argument of reducing the US trade deficit

Is the merit to the argument of reducing the US trade deficit and the inequitable tariff regime imposed by its trading partners that works unfavorably towards the US. Does this give merit to the ...
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1answer
67 views

how does the USA maintain the value of it currency in light of $800 billion trade deficits

In light of its Reserve currency status, How does the USA maintain the value of it currency in light of $\$800$ billion trade deficits that have accumulated to over $\$12$ trillion as pointed out by ...
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37 views

Normalise historic values given in different currencies

I have historic monetary values given in different currencies and stemming from different points in time. I want to be able to compare them, and for that all must be given in the same currency, and ...
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440 views

Are cryptocurrencies a ponzi scheme or a bubble?

Several users in this forum have addressed bitcoin and other cryptocurrencies as ponzi schemes. Bitcoins have several uses which could legitimate its value as a currency, but also have received ...
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Considering how USD enters the market, is the USD actually unbacked? Could the USD represent a unit of a “fund” of securities held by the Fed?

From my understanding, all new money enters the market either 1) by the Fed lending it to banks, so the Fed essentially owns bonds in the exchange, or, 2) The Fed purchasing other financial assets. So ...
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1answer
146 views

Currency Value Formula

I recently have gained interest in the way currency value is derived in crypto-currencies and have researched the ins and outs of supply and demand. Is there a particular mathematical formula to ...
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In a closed system, what is the relationship, if any, between currency supply and market capitalization?

Assuming: A world in which the market value of publicly traded companies is known Any transaction to buy or sell stock of said companies can only be consummated with a new currency X, which is freely ...
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749 views

How many US Dollars are lost or destroyed annually?

Are there any estimates on how many US Dollars are lost or destroyed annually? By "lost or destroyed", I mean permanently removed from circulation because the currency is no longer usable For ...
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How could the Roman sestertii/sesterces be converted into modern terms (say 2017 US$)?

Of course, the value of the sesterti must itself have fluctuated over the centuries it was in use. And so if I must narrow it down, I am particularly interested in its value during the time of ...
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140 views

How do economic and financial policies in government deal with cryptocurrencies?

Given the decentralized nature of cryptocurrencies like bitcoin and ethereum, how can centralized organisations like banks and the government create policies around it without changing the way ...
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1answer
25 views

Is it possbile central banks are outside of books getting money from deflation? [duplicate]

Is it possile that central banks are secretly stealing from the economy by printing money when the the dollar deflates, so the dollar stay the same value and nobody notice it? What if the dollar ...
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1answer
40 views

Central Banks Currency being used as value keeping hypothesis

I recently came up with the idea that all the worlds currencies with central banks may be being used as a way to steal value from people who give value to them. And no, im not talking about inflation (...
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453 views

Is there something that does not change its value that can be used to measure currency inflation?

Currency is represented as an exchange for something valuable, whether it be an object or work. Prices for objects can change over time, depending on demand and supply, making objects unreliable to ...
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158 views

Why are different currencies able to purchase different amounts?

I am baffled by this for so many years! Kindly, explain this in layman's terms (i.e. to a guy who never studied economics at a university): I can purchase one dozen of eggs for €3.52 in Frankfurt, ...
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948 views

What's the economic effect of a country reducing its imports?

If a country enacts a program that successfully reduces its imports, eg: A 'buy local' advertising campaign A program of training mechanics to maintain older cars, rather than buying new imports An ...
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32 views

Why Yen grew stronger after North Korea's H-bomb threat? [duplicate]

Financial markets have had only a muted reaction to the dispute in recent months, but on Friday assets regarded as havens for investors jumped immediately after the news of North Korea’s latest H-...
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Why do different countries have different currency?

Why do different countries have different currency? I have this question because I want to know why to divide it? If it's not divided then we can easily use the money anywhere and we won't need to ...
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1answer
194 views

Why is JPY considered a “safe currency”?

When the economic prospect around the world feels getting worse and/or getting higher uncertainty, usually the value of JPY is getting higher, because investors are said to start to buy JPY to shelter ...
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91 views

What are the constituents of a country's inflation

If we assume a country where only demand pull inflation holds, that is no imports cost inflation or currency fluctuations are a risk, then we can assume that inflation is determined by: Consumer ...
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265 views

Why does every electronic transaction of USD legally take place on American territory?

In an article of a respected German newspaper (Die Zeit) I found the following statement (translation by me): 90 % of all foreign exchange trades are dealt in USD. Since every electronic ...
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165 views

Norway inflation and exchange rates

I am looking at Norway's economy, and I'm trying to make sense of some of the data I see. Norway's economy has a very close relationship to crude oil, and in 2014 crude oil had a massive drop. Looking ...
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How can the HKMA peg the Hong Kong dollar at 7.8 HKD/USD for so long?

A lot of pegged exchange rate systems don't stay pegged for so long (e.g. because the central bank run out of reserves to maintain their values) So far I understand that the HKD is 100% backed by the ...
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2k views

How do countries create their own currencies (and give them meaningful value)?

Regardless of why they'd do it, what do countries do to make their own currency, replacing the old one, and give their new one value? I sorta get how it works, but this kind of economics is still ...
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268 views

Is it valid to compare cryptocurrencies by using their smallest divisible unit?

I'd like to compare the relative value (in USD) of three cryptocurrencies: Bitcoin, Ethereum, and IOTA. (See spreadsheet below.) Specifically, I'm comparing the price of each currency's smallest unit ...
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Inflation-adjusted units of account

In Chile, most of prices are measured in the local currency, the peso (currency code CLP). However, there are two other units of account. These are the UF and the UTM. These keep track of the real ...
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What are some benefits of local currencies?

Lets say that we have in my country Greece there is an Island Crete that it has big production (agriculture,small banks etc.) and produces big surplus compared with other parts of Greece and the ...
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2answers
75 views

Gresham's Law applied to wampum and gold/silver coins in the 1600s

So I was reading an article by Nick Szabo called "Shelling Out" And in his introduction paragraph he explains how American Indians use bones and shells as a currency called "wampum". This currency ...
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Where can I find historical (very old) USD printing data?

Where can I find historical/very old USD printing data? Charts can be useful, but I want numbers. It is for a project.
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Creating a currency

I have been given an assignment for creating my own currency in economics. I am curious what one should know when doing this. It doesn't have to be too elaborate but I would like some advice. I know ...
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Econometrics for currency valuation?

Different assets have different motivations and components for price determination. For example, an equity stock price might be considered to be include the value of underlying company, its potential ...